KARACHI: The stock market made a splendid recovery in the outgoing week with the KSE-100 index regaining 886 points, or 2 per cent, to close at 45,186. The bears that had wreaked havoc the earlier week and pummeled the index by 1,221 points were driven away after the first session in the outgoing week.

The equities rallied as the investors were encouraged by the upgrade by IMF of its local and global growth forecasts to 1.5pc and 6pc for FY21 respectively. Besides, stronger growth forecasts by IMF for FY22 at 4.0pc and lower than expected inflation reading in March (9.05pc compared to 9.5pc market consensus) positively impacted investor sentiments.

News flow during the week was dominated by IMF, mainly the $500m received as the third tranche of the Extended Fund Facility. Moreover, the announcement of receipt of $2.5bn by the SBP in lieu of Eurobond issuance provided markets a reason to cheer towards the end of the week.

On the political side, the government could breathe easy as the divided Opposition was scarcely a threat. On the negative side, the Covid-19 infection cases reported at above 5,000 on most days resulted in smart lockdowns in several cities that displayed higher incidences of disease.

Pakistan’s trade deficit swelled 118.36pc to $3.271bn in March compared to $1.498bn in the same period last year. Together with that the high volatility in global oil prices dented investor interest.

Foreign selling intensified during the outgoing week clocking-in at $9.5m. Outflow was witnessed in commercial banks of stocks worth $4.2m and fertiliser $3m. On the domestic front, major buying was reported by banks amounting to $3.2m and companies $2.5m. Average daily traded volume rose 9pc week-on-week to 410m shares while average daily value traded was lower by 9pc to $111m.

Sector-wise positive contributions in the outgoing week came from cement (280 points), technology & communication (256 points), textile composite (65 points), engineering (58 points) and power generation & distribution (57 points). Scrip-wise positive contributors were TRG (251 points), Lucky Cement (124 points), DGKC (45 points), Hubco (34 points) and NRL (33 points).

Going forward, the market pundits believed that the bullishness may last a while as investors await healthy corporate earnings in the upcoming quarterly financial results. Cyclicals such as cement and steel could capture the spotlight. Cement sector posted the highest-ever monthly growth of 44.39pc in March to 5.373m tonnes.

The Covid-19 infection cases which had stabilised by the end of the week while smart lockdown in hotspots already in place together with aggressive vaccination by the government, the investors worry over the pandemic could subside.

SBP reserves stood at the highest level since July 2017 while the rupee/dollar parity was seen to remain strong. Investors, however, could remain cautious on the flow of potential news leaks and rumours regarding new taxes planned by the IMF for the upcoming budget.

Published in Dawn, April 11th, 2021